By Zishan Amiri
Srinagar, Mar 20: In the last about six months witnessing the introduction of Goods and Services Tax (GST), cash transactions have become the traders’ preferred choice in Kashmir over cheques or similarly noticeable options.
Farhat Abbas, Business Unit Head, J&K Bank told The Kashmir Monitor that from past six months, there has been about 25 percent decrease in the cash-flow.
“We have witnessed this decrease in the cash-flow from past six months. And yes, to an extent, I would say that the decrease is because of the way business sector is dealing in more cash and less cheque,” Abbas said.
As per Abbas, due to cashless transaction and under-billing, the decrease in cash-flow eventually makes the bank look up to Reserve Bank of India for the notes.
A major Srinagar retailer dealing in Fast Moving Consumer Goods (FMCG) said that 80 percent of the businessmen in the valley deal in cash.
“They do it without any bill. And just to show that the business was carried out on papers, 20 percent of the amount is being paid in cheques,” the retailer said requesting not to be named.
As per the GST rule, those with annual turnovers of Rs 20 lakh or more are required to secure a GST number, link up to the GST Network, and submit their purchase and sale invoices to the tax authorities.
“You see, for retailers carrying out business on a high level, 20 lakh is a monthly turnover. Hence, for instance, to escape the burden of GST and Income Tax inquiries, if the dealing amount is of Rs 2 lakh, Rs 20,000 will be paid in cheque, just to show the record, and the rest of the amount will be cleared in cash,” the retailer said.
As per the retailer, the situation of the business sector in the valley is already disturbed due to the continuous conflict, and hence, to tackle initiatives like GST and demonetisation, “more cash and less cheque is the only justified option”.
“To carry out business in Kashmir is already a headache. The 2014 floods had massively affected the business firms here, and while we were still coming up with that loss, demonetisation hit us, followed by GST. What other option do we have?” the retailer justified.
While cash has come to the rescue of already “crippled” businessmen in the Valley, its effect on the banking sector, however, is evident.
A State Bank of India (SBI) official, who wished not to be quoted by name, also agreed that the cash-flow has been hit.
However, the official believes that the businessmen in the valley have started dealing in Kashmir to save themselves from the Income Text department’s “unnecessary interference”.
“I know an instance where a person was called by the Income Tax to come up with the statements of the transaction he had done in 2010. Why? Because he had done a transaction of Rs 18.3 lakh that year,” the official said.
The official believes that there are not much “big fish” in the market, and hence, “local businessmen are targeted”.
“In view of the scams that happen in India, how big an amount is Rs 18 lakh? Even if it is, why do the Income Tax officials wake up only after eight years?” the official said, giving the instance of the recent Nirav Modi scam.
“The Income Tax should be equally blamed for the decrease in cash flow and businesses that are being carried out without the bills.”
Although Mohammad Yaseen Khan, President Kashmir Traders & Manufacturers Federation agreed that under-billing takes place in the valley, he cited “recession” to be its centre cause.
“Recession has hit the state. There are so many instances in Kashmir alone where people here have taken financial assistance from the banks and have failed to repay it, reason being the growing recession,” he said.
Questioning the government’s claim to stop under-billing through GST, he added, “This has been happening before GST was implemented. Despite all the tall claims, everyone knows under-billing is still being practiced.”
